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HomeMy WebLinkAbout2008 Southold Fire District Financial Statements (Regulatory Basis) with Independent Auditors' Report December 31, 2(108 COUGHLIN FOUNDOTOS o CULLEN & DANOWSKI, LLP CERTII~IED PUBLIC ACCOUNTANTS VINCENT D CULLEN, CPA lAMES E. DANOWSKL CPA PETER E RODRIGUEZ, CPA JiLL S. SANDEP, S. CPA CItP~ISTOPHER~ R[INO CPA AlAN YU. CPA INDEPENDENT AUDITORS'REPORT To the Board of Fire Commissioners Southold Fire District Southold, New York We have audited the accompanying Annual Financial Repod Update Document of the Southold Fire District {District), as of and for the year ended December 31, 2008, which are the District's basic financial statements. These financial statements are the responsibility of the District's management. Our responsibility is to express opinions on the financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial repoding as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence suppoding the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As described more fully in Note 1, the Southold Fire District has prepared these financial statements using accounting practices prescribed and permitted by the New York State Office of the State Comptroller, which practices differ from accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. In our opinion, the financial statements referred to above present faJdy, in all material respects, the assets, liabilities and fund balances of each fund of the Southold Fire District, as of December 31, 2008, and their respective revenues and expenditures for the year then ended, on the basis of accounting described in Note 1. In accordance with Government Auditing Standards, we have also issued our report dated April 24, 2009, on our consideration of the Southold Fire District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in assessing the results of our audit. The other supplementary information on page 38 is not a required part of the basic financial statements but is provided for additional analysis. We have applied cedain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the other supplementary information. However, we did not audit the information and express no opinion on it. 1650 ROUTE 112, PORT JEFFERSON STATI(_)N, NEW YORK 11776 PHONE: 631-473 3400 ' [AX: 631 473 48(~3 ' WWW. CFCD.COM Our audit was conducted for the purpose of forming opinions on the Southold Fire District basic financial statements. The accompanying summary schedule of prior findings and management's response are presented for purposes of additional analysis as required by Government Auditing Standards and are not a required part of the basic financial statements of Southold Fire District. The summary schedule of prior findings and management's response have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. This report is intended solely for the use and information of the Board of Fire Commissioners and management of the Southold Fire District and the New York State Office of the State Comptroller and is not intended to be and should not be used by anyone other than these specified parties. April 24, 2009 All Numbers in This Report Have Been Rounded To The Nearest Dollar ANNUAL FINANCIAL REPORT UPDATE DOCUMENT For The FIRE DISTRICT of Southotd County of Suffolk For the Fiscal Year Ended 12/31/2008 AUTHORIZATION ARTICLE 3, SECTION 30 of the GENERAL MUNICPAL LAW: 1. ***Every Municipal Corporation *** shall annually make a report of its financial condition to the Comptroller. Such report shall be made by the Chief Fiscal Officer of such Municipal Corporation *** 5. All reports shall be certified by the officer making the same and shall be filed with the Comptroller within sixty days after the close of the fiscal year of such Municipal Corporation *** It shall be the duty of the incumbent officer at the time such reports are required to be filed with the Comptroller to file such repod *** State of NEW YORK Office of The State Comptroller Division of Local Government and School Accountability Albany, New York 12236 Page I FIRE DISTRICT OF Southold *** FINANCIAL SECTION *** Financial Information for the following funds and account groups are included in the Annual Financial Repod filed by your government for the fiscal year ended 2007 and has been used by the OSC as the basis for preparing this update document for the fiscal year ended 2008: (A) GENERAL (H) CAPITAL PROJECTS (K) GENERAL FIXED ASSETS (TA) AGENCY (W) GENERAL LONG-TERM DEBT All amounts included in this update document for 2007 represent data filed by your government with OSC as reviewed and adjusted where necessary. *** SUPPLEMENTAL SECTION *** The Supplemental Section includes the following sections: 1 ) Statement of Indebtedness 2) Schedule of Time Deposits and Investments 3) Bank Reconciliation 4) Local Government Questionnaire 5) Schedule of Employee and Retiree Benefits 6) Schedule of Energy Costs and Consumption All numbers in this report will be rounded to the nearest dollar. Page 2 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Balance Sheet Assets Cash Prepaid Expenses 399,640 A2.00 483,842 14,222 A480 21,186 Page 3 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Balance Sheet Liabilities And Fund Equity Accounts Payaele TOTAi~ ACcounts Payable Accrued Liabilities TOTAL AJ~rtl~ L4~tt~lfitles Due To Other Funds TOT~ Dug To Defe~ed Revenues TOT~ D~ TOT~- Resale For Encumbrances TOTAL R~e For En=u~b~ Miscellaneous Resale ~speci~) Unrese~ed Fund Balance Unappropriated TOT~ F~E~ 56,172 5.139 6,139 711 711 0 6~02~ 58.530 68,530 14.222 t4~2 279.088 279,088, 4t3,~2 A600 65,580 ~.5~0 A601 5.139 5,139 A630 253 253 A691 241.525 241,5,25 312,497 A821 57,273 87.273 A88g 21.186 ~,911 114.072 ~1 t4,072 Page 4 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Results of Operation Detail Revenues And Other Sources Reel Property Taxes Interest And Earnings Rental of Real Property Sales of Equipment Insurance Recovedes TOTAL ~le,~f PC~perty An~l C~,~p~gnsation Far L~s Unclassified (specie) TOT~ Mi~l~o~ E~I S~u~ TOTAL ~nu~ 1,479,355 A1001 1,598,050 44,223 A2401 20,088 17,229 A2410 19,430 A2665 5,066 3,000 A2680 3,~100 5,066 A2770 4.215 0 4,215 't .S43,eOT 1,64~,849 Page 5 OSC Municipality Code 471179008000 Southotd FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Results of Operation Detail Expenditures And Other Uses Fire, Pers Serv Fire, Equip & Cap Outlay Fire, Contr Expend 202,400 A34101 219,927 97,401 A34102 115,846 438,843 A34104 545,823 State Retirement System Local Pension Fund, Empl Bn[ts Social Security, Employer Cont Worker's Compensation, Empl Bnfls Hospital & Medical (dental) Ins, Empl Bnft 13,303 A90108 11,635 265,116 A90258 297,941 16,234 A90308 17,663 43,354 A90408 44,518 17,800 A90608 23,280 Debt Principal, Serial Bonds 100,000 A97106 125,000 Debt Interest, Serial Bonds 58,275 A97107 541525 Transfers, Other Funds 200,000 A99019 350,000 Page 6 OSC Municipality Code 471 I79008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Changes in Fund Equity ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity-Beginning of Year Prior Period Adj - Decrease In Fund Equity Restated Fund Equity- Beg of Year ADD - REVENUES AND OTHER SOURCES DEDUCT - EXPENDITURES AND OTHER USES Fund Equity-End of Year 260,759 A8021 351,840 A8015 260,759 A8022 351,840 1,543,807 1,646,849 1,452,726 1,806,158 351,840 A8029 192,531 Page 7 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Budget Summary Estimated Revenues And Other Sources Est Rev - Real Property Taxes Est Rev - Use of Money And Pmpedy 1,598,025 33,000 A1049N A2499N 1,694,038 44,200 Page 8 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Budget Summap/ Appropriations And Other Uses App - Public Safety App ~ Employee Benefits App - Debt Service 1,040.500 411.000 179,525 A3999N A9199N A9899N 1,145,000 418,400 174,838 Page 9 OSC Municipality Code 471 1 79008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (H) CAPITAL PROJECTS Balance Sheet Assets Due From Other Fonds 253 H391 253 Cash Special Reserves 416,731 H230 775,278 Page 10 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (H) CAPITAL PROJECTS Balance Sheet Liabilities And Fund Equity Due To Other Funds TOTAL Due To Other Funds TOTAL LlabiUthi~ CaPita Reserve TOTAL Special Reserves TOTAL Fund Eqnit~ TOTAL Liabilities And Fund Equl~ H630 0 0 O 0 416.984 H878 775.531 416,984 775,$3t 416,984 776,531 4¶6,984 775.53~ Page 11 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (R) CAPITAL PROJECTS Results of Operation Detail Revenues And Other Sources Ir~terest And Earnings TOTAL Use of Money And p~'operty TOTAL ReVenues merfund Transfers TOTAL Inte~und Transfers TOTAL Other Sourens TOTAL Detail Revenues And Other Sources 10,889 H2401 8,547 200,000 H5031 350,000 Page 12 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 Results of Operation Page 13 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (H) CAPITAL PROJECTS Changes in Fund Equity ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity - 13eginning of Year Re~tated Fund Equity - Beg of Year ADD - REVENUES AND OTHER SOURCES Fund Equity- ENd of Year 206,095 H8021 416,984 206,095 H8022 416,984 210,889 358,547 416,984 H8029 775,531 Page 14 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (K) GENERAL FIXED ASSETS Balance Sheet Assets Land Buildings Machinery & Equipment 258,752 K101 258,752 3,098,278 K102 3,118,590 2,830,590 K104 2,949,673 Page 15 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (K) GENERAL FIXED ASSETS Balance Sheet Liabilities And Fund Equity Total Non-Current Govt Assets 6,187,620 K159 6,327,015 6i187i620 6,3~,015 Page 16 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (TA) AGENCY Balance Sheet Assets Service Award Program Assets TOTA~ Due From Other Funds 2,377,025 TA461 2,491,684 Page 17 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (TA) AGENCY Balance Sheet Liabilities And Fund Equity Service Awards Other Funds (specify) 2,377.025 TA13 2,491,684 458 TA85 2,377i483iii 2A91;684 Page 18 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (W) GENERAL LONG-TERM DEBT Balance Sheet Assets Total Non-Current Govt Liabilities TO'rA~ ~ 1,400,000 W129 1,275,000 Page 19 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (W) GENERAL LONG-TERM DEBT Balance Sheet Liabilities And Fund Equity Bonds Payable 1,400,000 W628 1,275,000 ~ 2~ OOo ~ ~00,~0 Page 20 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2008 Page 21 Southold FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2008 Indebtedness Not Exempt From Constitutional Debt Limit 3ond No. 2003000001 IMonth and Year of Issue "~urpose of Issue ~.urrent Interest Rate ~,Outstanding Beginning of Year !2P18771 r~rior Year Adjustment ~ ssued During the Fiscal Year I (d~not include.renewals here) 12P18773 IPaid During the Fiscal Year (do not include renewals here) 2P18775 iOutstanding End of the Fiscal Year i2P18777 iFinal Maturity Date !EDPCODE Amount, 12/1/2002i iements to existing FH 3 7500i 1,400,000] 0~ ol 125,000~ 1,275,000~ 12/1/2017I rTotal Bond 3utstanding Beginning of Year ~rior Year Adjustment ilssued During Fiscal Year '~aid.During Fiscal 3utstanding End of Year Amount 1,400,000 125,000~ 1,275,0001 0 Total of All Indebtedness includes Total of Bonds and Notes Exempt and Not Exempt Total Bond Outstanding Beginning of Year ~rior Year Adjustment ilssued During Fiscal Year !Paid During Fiscal Year Dutstanding End of Year AmountI 1,400,0001 ol 125,000 1,275,0001 Page 22 OSC Municipality Code 47117900800 Southold FIRE DISTRICT Schedule of Time Deposits and Investments For the Fiscal Year Ending 2008 CASH: On Hand Demand Deposits Time Deposits Total COLLATERAL: - FDIC Insurance Collateralized with securities held in possession of municipality or its agent Total EDP Code 9Z2001 9Z2011 9Z2021 9Z2014 9Z2014A Amount $16.00 $388,404.00 $872,554.00 $1,260,974.00 $373,070.00 $070,372.00 $1,043,442.00 INVESTMENTS: - Securities (450) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4501 9Z4502 9Z4504A - Repurchase Agreements (451) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4511 9Z4512 9Z4514A Page23 OSC Municipality Code471179008000 Southold FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2008 Include All Checking, Savings and C.D. Accounts Bank Account Number ..... ~5531 ..... -1352 ..... 0001 ..... -0002 ..... -0003 Add: Less: Adjusted Bank Deposit Outstanding Bank Balance In Transit Checks Balance $265,334 $0 $1,854 $263,480 $123,070 $0 $0 $'i23,070 $97,276 $0 $0 $97,276 $744,388 $0 $0 $744,388 $30,890 $0 $0 $30,890 Total Adjusted Bank Balance $1,259~104 Petty Cash $16.00 Adjustments $.00 Total Cash 9ZCASH $1,259,120 Total Cash Balance All Funds 9ZCASHB $1,259,120 * Must be equal Page 24 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2008 1 ) Has your district adopted a written procurement prolicy and is it complied with? 2) Has your district contracted to have an independent audit of its financial statements? If not, has the Board of Fire Commissioners performed an internal audit of the Treasurer's records and reports? 3) Does your district have a written travel policy and is it complied with? 4) Are monthly bank reconciliations performed? 5) What is your district's statutory spending limitation margin (amount) for the next fiscal 6) Does your district have a Length of Service Award Program (LOSAP) for volunteer firefighters? If so, how are the LOSAP funds invested? Marketable Securities Annuities Life Insurance Other (describe) 7) Has your Fire District adopted an investment policy as required by General Municipal Law, Section 39? Response Y Y Y Y $2,861,144 Y N Y Page 25 Southold FIRE DISTRICT Employee and Retiree Benefits For the Fiscal Year Ending 2008 Code 9015~ 9025~ 9030~ 9040E 9045~ 9050~ 9055~ 9060E 9070E 9085~ 9189( !Computed Total From Financial ISection comparafive purposes only) Total Full T~me Emp oyees $11,635 00~ 2' 12] State Retirement System Police and Fire Retirement Local Pension Fund Social Security W0rke~'s ~ompensati~n Life Insurance Unemployment insurance Disability Insurance Hospital and Medical (Dental) Insurance Union Welfare Benefits Supplemental Benefit Payment Disabled Fire Fighters Other Employee Benefits $297,941 00 $17,663 00 $44,518 00 $23,280 Od $395,037,00 $395,037.00 2~ # of Retirees Page 26 OSC Municipality 471179008000 Southold FIRE DISTRICT Energy Costs and Consumption For the Fiscal Year Ending 2008 Energy Type ,Diesel Fuel Fuel oil :Natural Gas ;Electricity Coal Total Expenditures $6,402ji $16,295 $22,842 Total Volume Units Of Alternative Measure Units Of Measure 1,741 gallons i! 9ailons 8,310 cubic feet l!herms 120,928 kilowatts I tons Page 27 OSC Municipality 471179008000 SOUTHOLD FIRE DISTRICT Notes to Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Southold Fire District (District), as of and for the year ended December 31, 2008, have been prepared using accounting practices prescribed and permitted by the New York State Office of the State Comptroller, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units, The financial statements of the District have been prepared using only the modified accrual basis of accounting. This method differs from GAAP, which requires the preparation of additional financial statements using the accrual basis of accounting. The accrual basis financial statements require the capitalization and depreciation of property and equipment and the recording of long-term liabilities. Under the modified accrual basis of accounting, property and equipment are recorded as an expenditure when purchased and long-term liabilities are recognized when paid. In addition, GAAP requires the financial statements to be prepared in accordance with the Governmental Accounting Standards Board (GASB) No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. GASB 34 financial statements require the presentation of government-wide financial statements and management's discussion and analysis. The accounting practices used to prepare these financial statements do not require compliance with GASB 34. The significant accounting policies of the District are described below: A. Financial Reporting Entity The District is a district corporation and political subdivision of the state of New York, distinct from the municipalities in which it is located, In general, the District is governed by an elected board of fire commissioners (Board) and is required to have a treasurer and a secretary. The District has the legal authority to levy taxes on real property and to borrow in its own name. The District is governed by General Municipal Law and other laws of the state of New York and its subdivisions. The scope of activities included in the accompanying financial statements is the transactions which comprise the District's operations. The primary function of the District is to provide fire-protection, rescue and emergency services to the community. Services such as firefighting, fire prevention and public education support the primary function The financial reporting entity includes ail funds, functions and organizations over which the District's Board exercises oversight responsibility. Oversight responsibility is determined on the basis of financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations and accountability for fiscal matters. B. Basis of Presentation Fund Financial Statements The District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to assist management by segregating transactions related to certain government functions or activities A fund is a separate accounting entity with a self-balancing set of accounts. The District records its transactions in the fund types described below: Governmental Funds Governmental funds are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources and the related liabilities are accounted for through governmental funds. The measurement focus of the governmental funds is based upon determination of financial position and changes in financial position. The following are the District's governmental fund types: 28- SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) General Fund- the general fund is the principal operating fund of the District, It is used to account for all financial resources except those required to be accounted for in another fund. Capital Projects Fund - the capital projects fund is used to account for the accumulation of financial resources and the disbursements for the acquisition, construction or renovation of major capital facilities, or equipment. Fiduciary Funds Fiduciary Funds are used to account for assets held by the District in a trustee or custodial capacity. Agency Fund used to account for money (and/or property) received and held in the capacity of trustee, custodian, or agent. Account Groups Account Groups are used to establish accounting control and accountability for the District's general fixed assets and general long-term obligations. The two account groups are not 'funds'. They are accounting entities, not fiscal entities, and are concerned only with the measurement of financial position, and not with the results of operations. General Fixed Assets Account Group - the general fixed assets account group is used to account for land, buildings, improvements and equipment owned by the District. General Long-Term Debt Account Group - the general long-term debt account group is used to account for all long-term debt and other obligations of the District. C. Basis of Accounting and Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured (i.e., expenditures or expenses). All governmental funds are accounted for using a current financial resources focus. With this measurement focus, only current assets and current liabilities are included on the balance sheet. Operating statements present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in fund balance. Modified Accrual Basis - All governmental funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues are considered to be available if collected within 60 days after the end of the calendar year. Expenditures are recorded when the related liability is incurred except that expenditures for prepaid expenses and inventory-type items are recognized at the time of purchase, and principal and interest on indebtedness and compensated absences, such as vacation and sick leave which vests or accumulates, are not recognized as expenditures until due and payable. D. Property Taxes Real propert,,/ taxes are levied annually by the District no later than November 1s~ and become a lien on December 'is'. The District's tax levy is collected by the town of Southold and then remitted to the District from January to June The county of Suffolk is responsible for all uncollected taxes. 29- SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) E. Interfund Transactions The operations of the District include transactions between funds. These transactions may be temporary in nature, such as with interfund borrowings. The District typically loans resources between funds for the purpose of providing cash flow. These interfund receivables and payables are expected to be repaid within one year. Permanent transfers of funds include transfers to provide financing or other services. This includes the transfer of unrestricted general fund revenues to finance various programs that the District must account for in other funds in accordance with budgetary authorizations. A detailed disclosure by individual fund for inter~und receivables, payables, transfers in and transfers out is provided subsequently in these Notes to Financial Statements. F. Use of Estimates The preparation of financial statements in conformity with a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period, Accordingly, actual results could differ from those estimates. G. Cash Cash consists of cash on hand, demand deposits and short-term investments with original maturities of three months or less from date of acquisition. H. Prepaid Items Prepaid items represent payments made by the District for which benefits extend beyond year end These payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the financial statements. A current asset for the prepaid amounts is recorded at the time of purchase and an expenditure is reported in the year the goods or services are consumed. I. General Fixed Assets The General Fixed Assets section of the Annual Financial Report Update Document (General Fixed Asset Account Group) reports the District's capital assets at original cost. Capital thresholds, the dollar value above which asset acquisitions are added to the capital asset accounts are reported as follows: Capitalization Threshold Buildings and improvements Site improvements Furniture and equipment 1,000 1,000 1,000 J. Long-Term Obligations The liabilities reported in the general long term debt account group include the District's general obligation bonds The District issues general obligation bonds, which are full faith and credit debt, to fund the acquisition or construction of capital assets (land, buildings, improvements and equipment). This enables the cost of these assets to be borne by the present and future taxpayers receiving the benefit of the capital assets. - 30 - SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) K. Fund Balance - Reserves and Designations Fund balance reserves are created to satisfy legal restrictions, plan for future expenditures or relate to resources not available for general use or appropriation. These reserve funds are established through Board action or voter approval and a separate identity must be maintained for each reserve. Earnings on the invested resources become part of the respective reserve funds; however, separate bank accounts are not necessary for each reserve fund. Fund balance reserves currently in use by the District include the following: Reserve for Encumbrances Reserve for encumbrances represents the amount of outstanding encumbrances at the end of the calendar year, The reserve is accounted for in the general fund Reserve for Prepaid Reserve for prepaid is used to restrict that portion of fund balance, which is not available for appropriation. The reserve is accounted for in the general fund. Reserve for Capital Reserve for capital is used to finance all or part of the cost of construction, reconstruction or acquisition of a specific or type of capital improvement or acquisition of a specific item or items or type of equipment. The reserve is accounted for in the capital projects fund. 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgets The District administration prepares a proposed budget for approval by the Board for the general fund, the only fund with a legally adopted budget. Budgets are adopted annually on a basis consistent with the accounting method used to prepare the Annual Financial Report Update Document. Appropriations are adopted at the program line item level. Appropriations established by the adoption of the budget constitute a limitation on expenditures (and encumbrances) that may be incurred. Appropriations authorized for the year are increased by the amount of encumbrances carried forward from the prior year. Appropriations lapse at the end of the fiscal year unless expended or encumbered. Encumbrances will lapse if not expended in the subsequent year. Appropriations authorized for the current year are increased by the planned use of specific reserves, and budget amendments approved by the Board as a result of selected new revenue sources not included in the original budget (when permitted by law). These supplemental appropriations may occur subject to legal restrictions, if the Board approves them because of a need that exists which was not determined at the time the budget was adopted. During the current year, there was a supplemental appropriation for the transfer of prior year surplus to the reserves. A summary of the general fund budget is as follows: Budget approved by Board of Commissioners Encumbrances from prior year Board approved transfer of prior year fund balance Final budget $ 1,631,025 58,530 150,000 $ 1,839,555 The District over-spent its adopted budget by $23,876 -31 SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) B. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed as a control in preventing over expenditure of established appropriations. Open encumbrances are reported as reservations of fund balances since they do eot constitute expenditures or liabilities and will be honored through budget appropriations in the subsequent year. Expenditures for such commitments are recorded in the period in which the liability is incurred. 3. DEPOSITS WITH FINANCIAL INSTITUTIONS AND INVESTMENTS The District's investment policies are governed by state statutes and District policy. Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements and obligations of New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit not covered by FDIC insurance. Obligations that may be pledged as collateral are obligations of the United State and its Agencies and obligations of New York State and its municipalities. Investments are stated at fair value. Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. GASB directs that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance and the deposits are either: A. Uncollateralized, B. Collateralized by securities held by the pledging financial institution, or C. Collateralized by securities held by the pledging financial institution's trust department or agent but not in the District's name. None of the District's aggregate bank balances, not covered by depository insurance, were exposed to custodial credit risk as described above at year end The District did not have any investments at year end or during the year. Consequently, the District was not exposed to any material interest rate risk. Investment pool: The District participates in a multi-municipal cooperative investment pool agreement pursuant to New York State General Municipal Law Article 5-G, §119-O, whereby it holds a portion of the investments in cooperation with other participants. The investments are highly liquid and are considered to be cash equivalents Total investments of the cooperative as of December 31, 2008 are $873,314,971, which consisted of $224,855,924 in repurchase agreements, $391,400,000 in U.S. Treasury Securities, $7,059,047 in U.S. Government Guaranteed Securities and $250,000,000 in collateralized bank deposits, with various interest rate and due dates. The following amounts are included as cash in the District's funds: Carrying Fund Amount General fund $ 97,276 Capital projects fund 775,278 $ 872,554 The above amounts represent the cost of the investment pool shares, and are considered to approximate market value. The investment pool is categorically exempt from the New York State collateral requirements. Additional information concerning the cooperative is presented in the annual report of MBIA, Inc. 32- SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) 4. GENERAL FIXED ASSETS During the current year, the District obtained an independent appraisal of its land, buildings and equipment which valued those assets at original cost. Capital asset balances and activity for the year ended December 31, 2008, were as follows: Balance Balance January 1, December 31, 2008 Additions Deletions 2008 $ 258,752 $ $ $ 258,752 3,098,278 20,312 3,118,590 2,830,590 119,083 2,949,673 $ 6,187,620 $ 139,395 $ $ 6,327,015 Land Buildings Equipment 5. INTERFUND TRANSACTIONS Interfund balances at December 31,2008, are as follows: Interfund Receivables Payables Transfers In General fund Capital projects fund Transfers Out $ $ 253 $ $ 350,000 253 350,000 $ 253 $ 253 $ 350,000 $ 350,000 The District transfers from the general fund to the capital projects fund in accordance with the general fund budget. The District may also transfer general fund surplus based on Board resolution. 6. PENSION PLANS A. New York State and Local Employees' Retirement System Plan Description The District elected to participate in the New York State and Local Employees' Retirement System (ERS) This system is a cost-sharing, multiple-employer, defined benefit pension plan, The system offers retirement and disability benefits, annual cost of living increases, and death benefits to plan members and beneficiaries. The ERS is established pursuant to the New York State Retirement and Social Security Law to provide benefits for the state, local governments, and their employees, ERS plan benefits are guaranteed by state constitution, The system issues publicly available financial reports that include financial statements and required supplementary information. These repods may be obtained by writing or calling the system at the following location: NYS and Local Retirement Systems, Gov Alfred E Smith State Office Building, 110 State Street, Albany, NY 12244. 33- SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) Funding Policy The system is noncontributory except for employees who joined the retirement system after July 27, 1976, with less than ten years of service, who contribute 3% of their salary. Regardless of start date, all members may elect to make member contributions. The New York State Comptroller shall annually certify the rates expressed as proportions of the members' payroll, which shall be used in computing the contributions required to be made by employers to the pension accumulation fund. The District is required to contribute on an annual basis. Contributions are generally made to the ERS on December 15, for the period April 1 to March 31 of the following year based on estimated eligible employees' salaries. Contributions are adjusted in the following year based on actual salaries. The following represents the District's regular pension contribution to the system based on annual covered payroll: 2008 2007 2006 District contributions $ 11,356 $ 12,472 $ 17,354 The District's contribution to the system is actuarially determined and is established and may be amended by the ERS Board of Trustees. B. Length of Service Award Program (LOSAP) The District established a defined benefit LOSAP for the active volunteer firefighters of the Southold Fire Department. The program took effect on January 1, 1993. The program was established pursuant to Article 11-A of the General Municipal Law. The program provides municipally-funded pension-like benefits to facilitate the recruitment and retention of active volunteer firefighters. The District is the sponsor of the program. The information contained in this note is based on information for the Length of Service Award Program for the plan year ending on December 31, 2008, which is the most recent plan year for which complete information is available. Program Description Parlicipation, Vesting and Service Credit Active volunteer firefighters who have reached the age of 18 and who have completed 1 year of firefighting service are eligible to participate in the program. Participants acquire a nonforfeitable right to a service award after being credited with 5 years of firefighting services or upon attaining the program's entitlement age. The program's entitlement age is age 62. In general, an active firefighter is credited with a year of firefighting service for each calendar year after the establishment of the program which he or she accumulates fifty points. Points are granted for the performance of certain activities in accordance with a system established by the sponsor on the basis of a statutory list of activities and point values. A participant may also receive credit for 5 years of flrefighting service rendered prior to the establishment of the program, provided the total entitlement does not exceed the maximum dollar amount established by the Plan. BeneNs A participant's benefit under the program is the actuarial equivalent of a monthly payment for life equal to $20 multiplied by the person's total number of years of firefightin9 service. The number of years of firefighting service used to compute the benefit cannot exceed forty. Benefits are not payable until the Plan anniversary date of the month after the participant's 62nd birthday, except in the case of disability or death. The program provides statutorily mandated death and disability benefits 34- SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) Fiduciary Investment and Control Service credit is determined by the governing board of the sponsor, based on information certified to the governing board by each fire company having members who participate in the program. Each fire company must maintain all required records on forms prescribed by the governing board. The governing board of the sponsor has retained and designated Hometown/RSA Consultants to assist in the administration of the program. The designated program administrator's primary responsibility is to administer the plan for the exclusive benefit of the participants and their beneficiaries. Such duties include, but are not limited to, determining eligibility of firefighters to participate in the plan, compute participant entitlement, authorize disbursements to participants, compute necessary contribution amounts, maintain all necessary records and consult with the sponsor and the trustee on long-term investment plans. Disbursements of program assets for the payment of benefits or administrative expenses must be reviewed by the trustee (i.e. the Board of Fire Commissioners) and signed by at least two board members prior to being disbursed by the administrator Program assets are required to be held in trust by LOSAP legislation, for the exclusive purpose of providing benefits to participants and their beneficiaries or for the purpose of defraying the reasonable expenses of the operation and administration of the program. The trust agreement is dated February 8, 2005, and the trustee is the Board of Fire Commissioners. Authority to invest program assets is vested in the administrator, with the Board of Fire Commissioners' prior written approval. Subject to restrictions in the program document, program assets are invested in accordance with a statutory "prbdent person" rule. The program document calls for all investment decisions to be chosen and approved by the trustee, the Board of Fire Commissioners, prior to being invested by the administrator. The sponsor is required to retain an actuary to determine the amount of the sponsor's contributions to the plan The actuary retained by the sponsor for this purpose is Harbridge Consulting Group, LLC. Podions of the following information are derived from a repod prepared by tl~e actuary dated March, 2009. Pro,qram Financial Condition Assets and Liabilities Actuarial Present Value of Benefits at December 31, 2008 $ 3,419,891 Less: Assets Available for Benefits %oftotal Trust Annuity Insurance contracts 14.174% $ 353,178 65.271% 1,626,338 20.555% 512,168 Total Net Assets Available for Benefits 2,491,684 928,207 (928,207) $ Total Unfunded Benefits Less: Unfunded Liability for Prior Service Unfunded Normal Benefits 35 SOUTHOLD FiRE DISTRICT Notes to Financial Statements (Continued) Prior Service Costs Prior service costs are being amortized over 18 years at a discount rate of 6.00% Receipts and Disbursements Plan Net Assets, Beginning of Year $ 2,377,025 Changes during the year + Plan contributions + Investment income earned +/- Changes in fair market value of investments - Plan benefit withdrawals + Administrative and other fees/charges 290,859 78,204 (25,986) (232,318) 3,900 114,659 2,491,684 319,195 276,232 290,859 3,900 Plan Net Assets, End of Year Contributions Maximum amount of sponsor's contribution recommended by actuary: Minimum amount of sponsor's contribution recommended by actuary: Amount of sponsor's actual contribution: Administration Fees Fees paid to designated program administrator Fees paid to trustee Fees paid for investment management (if separate from fee paid to trustee) Fee paid to actuary Other administration fees (list) Normal Costs The actuarial valuation methodology used by the actuary to determine the sponsor's contribution is the unit credit cost method. The assumptions used by the actuary to determine the sponsor's contribution and the actuarial present value of benefits are: Assumed rate of return on investment 600% Mortality tables used for Withdrawal None DisabiLity None Retirement 1994 Group Annuity - Male Death (actives) None Death (inactives} None Other None 36- $OUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) 7. LONG-TERM LIABILITIES Long-term liability balances and activity for the year are summarized below: Balance Balance Amounts January 1, December 31, Due Within 2008 Additions Reductions 2008 One Year Long-term debt: Bonds payable $ 1,400,000 $ $ 125,000 $ 1,275,000 $ 125,000 The general fund has typically been used to liquidate long-term liabilities. Bonds payable are comprised of the following: Description Outstandin9 at Issue Final interest December 31, Date Maturity Rate 2008 Bond 6/24/2002 7/9/2017 3.7 - 4.2% $ 1,275,000 The following is a summary of debt service requirements for bonds payable: Fiscal Year Ending December 31, Principal Interest Total 2009 $ 125,000 $ 49,837 $ 174,837 2010 125,000 45,150 170,150 2011 125,000 40,462 165,462 2012 150,000 35,778 185,775 2013 150,000 30,150 180,150 2014- 2017 600,000 61,650 661,650 Total $ 1,275,000 $ 263,024 $ 1,538,024 Interest on long-term debt for the year was $54,525 8. COMMITMENTS AND CONTINGENCIES Risk Management The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; injuries to employees; errors and omissions; and natural disasters, etc. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past three years. 9. SPENDING LIMITATION The District did not exceed the statutory spending limitation imposed by New York State Law for the year ended December 31, 2008, and the budget for the year ending December 31, 2009. - 37 SOUTHOLD FiRE DISTRICT Schedule of Revenues, Expenditures and Encumbrances Budget and Actual - General Fund For the Year Eeded December 31, 2008 Board Approved Final Budget Budget Actual REVENUES Real property taxes $ 1,596,025 $ 1,598,025 $ 1,598,050 Rental of real property 19,430 Interest and earnings 33,000 33,000 20,088 Sate of equipment 5,066 Miscellaneous 4,215 Total Revenues EXPENDITURES Personal services Equipment & capital outlay Fire protection State retirement Service award program Social security Workers' compensation Medical & accident insurance Debt Service Principal Interest Total Expenditures OTHER USES Operating transfers out Total Expenditures and Other Uses Net Change in Fund Balances Fund Balances Beginning of Year Fund Balances - End of Year 1,631,025 1,631,025 1,646,849 218,000 218,000 219,927 128,000 171,530 115,846 500,500 524,100 545,823 20,000 11,400 11,635 300,000 300,000 297,941 12,000 12,000 17,663 50,000 50,000 44,518 23,000 23,000 23,280 125,000 125,000 125,000 54,525 54,525 54,525 Final Budget Variance with Actual $ 25 19,430 (12,912) 5,066 4,215 $ 15,824 Final E~udget Variance with Year End Actual and Encumbrances Encumbrances $ $ (1,927) 57,273 (1,589) (21,723) (235) 2,059 (5,663) 5,482 (280) 1,431,025 1,489,555 1,456,158 57,273 (23,876) 200,000 350,000 350,000 1,631,025 1,839,555 1,806,158 $ 57,273 $ (23,876) (208,530) (159,309) 208,530 351,840 $ $ $ 192,531 See Independent Auditors' Report - 38 COUGHLIN FOU N DO'IL)5 CULLEN & DANOWSKI, il P CERTIFIED PUBLIC ACCOUNTANTS [A'x~tb 1{. DANOWSKI Pk ] iR [: RODIqGUEZ CPA REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Fire Commissioners Southold Fire District Southold, New York We have audited the Annual Financial Report Update Document of the Southold Fire District, as of and for the year ended December 31, 2008, and have issued our report thereon dated April 24, 2009. As described more fully in Note 1, the Southold Fire District has prepared these financial statements using accounting practices prescribed and permitted by the New York State Office of the State Comptroller, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Southold Fire District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Southold Fire District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Southold Fire District's internal control ove~ financial reporting A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the District's ability to initiate, authorize, record, process, or report financial data reliably in accordance with accounting practices as described more fully in Note 1, such that there is more than a remote likelihood that a misstatement of the District's financial statements that is more than inconsequential will not be prevented or detected by the District's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the District's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtainin9 reasonable assurance about whether the Southold Fire District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and 9rant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we have reported to the Board of Fire Commissioners and management of the Southold Fire District in a separate letter dated April 24, 2009. This report is intended solely for the use and information of the Board of Fire Commissioners and management of the Southold Fire District and the New York Stale Office of the State Comptroller and is not intended to be and should not be used by anyone other than these specified padies. April 24, 2009 40 SOUTHOLD FIRE DISTRICT Summary Schedule of Prior Findings For the Year Ended December 31, 2008 There were no prior findings. - 4'1 SOUTHOLD FIRE DISTRICT Schedule of Findings For the Year Ended December 31, 2008 There are no findings iLO be repot[ed. 42- SOUTHOLD FIRE DISTRICT Management's Response For the Year Ended December 31, 2008 Management is not required to prepare a response. 43-